It was a solid year of price performance for homes in our Bethesda area in 2015. The average price of detached home in Bethesda (zip codes 20814, 20816 and 20817) climbed to $1,117,073, an increase of 2% over 2014. The median price of a detached home was $945,000, an increase of 2.6% over 2014.
That may not seem like much but by way of comparison, the S&P 500 index finished a choppy year just under
where it started.
It took a little longer to sell a detached home in Bethesda last year. The average days to secure a contract climbed from 36 days to 40 days.
The big story this past year was the increase in the number of homes sold in our area. There were 813 detached homes sold in Bethesda this past year, an increase of 12% over 2014.
By way of comparison, the high-water mark of detached home sales in Bethesda occurred in 2003 (four years before the financial crisis began) with 1,030 homes being sold that year.
Low interest rates, combined with a steadily growing economy, have helped consumers feel more confident in their jobs and financial future. Lynn Franco, Director of Economic Indicators at The Conference Board, summed it up this way,
“As 2015 draws to a close, consumers’ assessment of the current state of the economy remains positive, particularly their assessment of the job market. Expectations regarding their financial outlook are mixed, but the optimists continue to outweigh the pessimists.”
There has been much hype recently about the Federal Reserve’s hike in the discount rate (the first rate-hike in nearly a decade) and the impact on interest rates. The 0.25% Fed rate hike won’t have an immediate effect on mortgage rates. However, 30-year fixed rate mortgage rates have risen over the past year, from 3.75% at the beginning of the year to 4.0% at the end of December, and will likely go higher.
The Office of the Chief Economist at Freddie Mac recently gave these insights, “We don’t expect tighter monetary policy to generate a spike in longer-term interest rates in the foreseeable future…While mortgage rates will rise modestly, they will remain at historically low levels.”
Most economist are predicting that mortgage interest rates will gradually rise into the 4.25% to 4.5% range over the coming year.
This is bad news for first-time and trade-up buyers but overall still very attractive and considered “affordable” interest rates. In contrast, interest rates were hovering around 6.5% just before the financial crisis began in 2007.
We predict 2016 will be another solid year for real estate in Bethesda with price appreciation expected again to be around 2%. Our area receives a multiplier effect locally as the national economy continues to improve and bring more people to the area for employment. As you can see by the number of cranes hovering over the downtown Bethesda skyline, our area is experiencing significant growth and development. It’s a bittersweet experience as we transition from a small town to a small city.
If you are considering the sale of your home in the future please call us! We’re here to help. We live in Bethesda and are never too busy to answer any question you may have.
~Brian & Amy